The U.S. Internet search giant Google has come under attack on charges that it receives unfair government aid — from South Korea.
Google is pocketing taxpayer money to cover up to 80% of the labor costs for local programmers and up to 50% of accommodation expenses for employees dispatched from Google's U.S. headquarters to train its South Korean workers, according to a story published Thursday in Chosun IIbo, South Korea’s largest newspaper.
Citing complaints from unnamed domestic Internet portals, Chosun IIbo said the funding was part of an incentive package extended by the Ministry of Commerce, Industry and Energy to Google in October to persuade the U.S. search giant to set up a research and development center in Seoul.
The paper said domestic Internet companies kept quiet at the time, but decided to speak out now following a visit earlier this week by Eric Schmidt, Google's CEO, which coincided with Google’s launch of a new user-friendly Korean-language home page.
It may be the leader worldwide, but Google lags far behind homegrown competitors in the South Korean market, which is dominated by the search engine Naver, owned by NHN Corp., and Daum. In similar fashion to the way "googling" has become a verb in English, South Koreans "ask Naver."
Together, Naver and Daum control about 60% of a market worth 907 billion won ($970 million) a year, with Naver holding a decisive lead with a 43% share, according to an estimate from Citigroup.
Playing to nationalism, Chosun Ilbo said the government is aiding the largest foreign competitor in the industry with a market capitalization 18 times larger than that of the biggest homegrown player, NHN.
Google is one of more than a dozen multinationals that have set up R&D centers in South Korea with the aid of government largesse, including Texas Instruments, Advanced Micro Devices, Battelle Memorial Institute and Kimberly-Clark, with reciprocal investment pledged to be made in the country to the tune of 58 billion won ($62 million).
For its part, Google had said it would plunk down $10 million in the country in the R&D center’s first two years of operation. The R&D center was seen as an economic shot in the arm in South Korea given that it was the first foreign investment announced following nuclear tests by North Korea.
Asian governments have been competing relentlessly to lure heavyweight multinationals to set up R&D centers to speed up their countries' technological advancement. These centers almost inevitably involve government funding in one form or another.
At the time, Alan Eustace, a Google senior vice president, was quoted in The Korea Herald as saying that the new center would enable it "to recruit local computer scientists to further develop innovative search technologies for Korean users around the world."
While in Seoul, Schmidt was reportedly conducting negotiations for a partnership with Daum, Korea’s second-largest portal and online search site founded by its CEO Jae Woong Lee.
Google's Korean-language site has often been faulted for failing to reflect local sensibilities. This week, the National Geographic Information Institute complained publicly about Google’s repeated refusals to change the names of certain politically sensitive places in its online mapping service, Google Earth.
These include its use of the Chinese rendition of "Baitoushan," for Mt. Baekdu on the North Korean-Chinese border, “Kamasan," the Japanese name for Mt. Halla on Jeju Island in the south, and Liancourt Rocks, the Japanese name for a group of disputed islets to the east of the Korean peninsula that is known as Dokdo in Korean.
Source: Forbes.com
Google is pocketing taxpayer money to cover up to 80% of the labor costs for local programmers and up to 50% of accommodation expenses for employees dispatched from Google's U.S. headquarters to train its South Korean workers, according to a story published Thursday in Chosun IIbo, South Korea’s largest newspaper.
Citing complaints from unnamed domestic Internet portals, Chosun IIbo said the funding was part of an incentive package extended by the Ministry of Commerce, Industry and Energy to Google in October to persuade the U.S. search giant to set up a research and development center in Seoul.
The paper said domestic Internet companies kept quiet at the time, but decided to speak out now following a visit earlier this week by Eric Schmidt, Google's CEO, which coincided with Google’s launch of a new user-friendly Korean-language home page.
It may be the leader worldwide, but Google lags far behind homegrown competitors in the South Korean market, which is dominated by the search engine Naver, owned by NHN Corp., and Daum. In similar fashion to the way "googling" has become a verb in English, South Koreans "ask Naver."
Together, Naver and Daum control about 60% of a market worth 907 billion won ($970 million) a year, with Naver holding a decisive lead with a 43% share, according to an estimate from Citigroup.
Playing to nationalism, Chosun Ilbo said the government is aiding the largest foreign competitor in the industry with a market capitalization 18 times larger than that of the biggest homegrown player, NHN.
Google is one of more than a dozen multinationals that have set up R&D centers in South Korea with the aid of government largesse, including Texas Instruments, Advanced Micro Devices, Battelle Memorial Institute and Kimberly-Clark, with reciprocal investment pledged to be made in the country to the tune of 58 billion won ($62 million).
For its part, Google had said it would plunk down $10 million in the country in the R&D center’s first two years of operation. The R&D center was seen as an economic shot in the arm in South Korea given that it was the first foreign investment announced following nuclear tests by North Korea.
Asian governments have been competing relentlessly to lure heavyweight multinationals to set up R&D centers to speed up their countries' technological advancement. These centers almost inevitably involve government funding in one form or another.
At the time, Alan Eustace, a Google senior vice president, was quoted in The Korea Herald as saying that the new center would enable it "to recruit local computer scientists to further develop innovative search technologies for Korean users around the world."
While in Seoul, Schmidt was reportedly conducting negotiations for a partnership with Daum, Korea’s second-largest portal and online search site founded by its CEO Jae Woong Lee.
Google's Korean-language site has often been faulted for failing to reflect local sensibilities. This week, the National Geographic Information Institute complained publicly about Google’s repeated refusals to change the names of certain politically sensitive places in its online mapping service, Google Earth.
These include its use of the Chinese rendition of "Baitoushan," for Mt. Baekdu on the North Korean-Chinese border, “Kamasan," the Japanese name for Mt. Halla on Jeju Island in the south, and Liancourt Rocks, the Japanese name for a group of disputed islets to the east of the Korean peninsula that is known as Dokdo in Korean.
Source: Forbes.com